Fortune 500 Homebuilder Toll Brothers To Acquire Arkansas Competitor

by Tristan Navera

Toll Brothers, one of the nation's largest homebuilders, will acquire Arkansas-based Buffington Homes, continuing a trend of major homebuilder consolidation.

The deal, expected to close in the third quarter, will be Toll Brothers' 16th homebuilder acquisition since 1995. Terms of the deal were not disclosed, but Buffington Homes' senior leadership and employees will join the company.

"Buffington Homes is the leading luxury home builder in this market with exceptional communities, strong financial performance, and a reputation for quality," Toll Brothers CEO Karl Mistry said in a statement. "We look forward to leveraging their team’s local expertise and strong land position in northwest Arkansas while adding value and scale to successfully grow the business into the future.”

Buffington Homes is a private builder aimed at first- and second-time homebuyers, founded in 2010. Its homes are concentrated in northwest Arkansas, an area of dynamic growth centered on Walmart's headquarters in Bentonville and a new market for Toll Brothers.

Buffington now has nine communities with 1,500 lots, and homes ranging from $400,000 to $1 million. Toll Brothers' business stretches across 60 markets and 75,000 lots.

Consolidation spree continues in homebuilding

The U.S. homebuilding industry itself faces consolidation, with some large homebuilders growing in market share. Harvard University researchers estimated the number of homebuilders fell 22% from 2002 to 2017. That meant a loss of almost 19,000 firms.

And now, the top 100 homebuilders account for half of all sales, up from just a third two decades ago, Harvard found.

Several other major homebuilder acqusitions are underway this year. Sumitomo Forestry Co. Ltd.'s plan to acquire Tri-Pointe Homes Inc. in a $4.5 billion deal is among the largest.

Several Japanese firms announced their intent to acquire three other builders this year, a trend driven by weak growth in Japan and foreign confidence in the fundamentals of the U.S. housing market.

Toll Brothers stock (NYSE: TOL) registered a brief spike Wednesday morning on the announcement and is trading at $148.80 a share mid-morning. The $10.8 billion Pennsylvania-based company is one of America's largest builders, and specializes in upscale and luxury homes.

Following the merger, Buffington Co-owners Clay Carlton and Mike Lamberth will focus on land acquisition and development. Co-owner Mike Buffington, brother of the company's founder, will step away from the business.

Toll Brothers "has the brand recognition, operating expertise, and financial strength to accelerate our growth across northwest Arkansas," Carlton said.

"Our companies also share similar values and a focus on excellence in our industry, making this a perfect fit for our employees and customers alike,” Carlton said.

Tony Avila of Builder Advisor Group is acting as business advisor to Buffington Homes.

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